“Inflation appears to be past its peak, which has halted the rapid rise in mortgage rates that the housing market experienced earlier this year,” said Sam Khater, Freddie Mac’s chief economist. Higher mortgage rates have taken a toll on the housing market this summer. In addition to plummeting sales of both new and existing homes, fewer people are applying for mortgages. “The market continues to absorb the cumulative impact of large price and interest rate hikes that led to a plunge in affordability,” Khater said. “As a result, over the rest of the year, market demand will likely continue to decline, supply will increase modestly and house price growth will slow.” Mortgage application activity was lower last week than the week before, and overall applications fell to their lowest levels since 2000, according to the Mortgage Bankers Association. “Home purchase applications continued to be limited due to a rapid depletion of demand as high mortgage rates, challenging affordability and a gloomier outlook for the economy kept buyers on the sidelines,” said Joel Kan, associate vice president of finance and industry of MBA predictions. . However, he said, if home price growth slows more significantly and mortgage rates decline, buying activity may pick up later in the year. However, affordability remains a challenge for many prospective homebuyers, especially compared to the cost of financing a home just last year. A year ago, a buyer who put 20% down on a $390,000 home and financed the balance with a 30-year, fixed-rate mortgage at an average rate of 2.86% had a monthly mortgage payment of $1,292, according to calculations by Freddie . Mac. Today, a homeowner buying the same price home with an average interest rate of 5.13% would pay $1,700 a month in principal and interest. That’s almost $408 more each month.
